Thread by @GoshawkTrades

Recently @thelaptoplegend recommend 'The China Hustle', an eye-opening documentary on fraudulent Chinese companies.

Why this is a must-watch for anyone shorting in the small-cap #trading space:
1⃣

The documentary follows a group of investors and money managers who discovered a scam happening in 2017 with Chinese companies joining the US markets through backdoor mergers.
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These fraudulent companies claimed to be profitable and fast expanding, but they were actually using forged financial documents to deceive investors.

It's remarkable to see how these companies were able to enter the US market so easily.
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I won't give away the entire documentary because I feel watching it for yourself will demonstrate why there can be so many rigged and fake companies on the market.

Which will help provide perspective and insight into what companies you might be shorting on a daily basis
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Apart from dilution, small-cap fundamentals are never a big deal for me. However, this documentary demonstrated to me that there can be a significant edge in applying and comprehending fundamentals, but this raises the question of how one would know if they are a fraud.
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Consider the following common strategies:
Their main office location listed for the company.
Their financials (however as shown these can be faked)
Diltution patterns
Underwriters
Sector and Country of Origin
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None of these methods, however, will be as accurate as simply visiting their main place of production, as illustrated in the documentary.

However, I merely hope that this helps with idea generation and provides some entertainment.

#TheChinaHustle #shortselling #investing
7⃣

Consider following, liking ♥️, and retweeting if you enjoy this type of content.

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